Forecasting ultrafast broadband in the UK 2016 to 2020 and 2025

What will happen to broadband in the UK up to 2025?

Latest postcode data from Point Topic tracks ultrafast technologies and the upstream and downstream bandwidth they enable in the UK with annual outputs to 2025. Data layers combined with geographic demography enables Point Topic to establish what we believe will happen to broadband in the UK well into the next decade.

The technologies that enable high speed data delivery are continually evolving. Driven by a number of pressures, historically mostly related to video, there are going to be three primary fixed delivery channels in the UK for the next ten years capable of delivering ‘ultrafast’ bandwidths – fibre to the premises (FTTP GPON), G.fast and DOCSIS3 and 3.1 (inc. RFOG).

At the moment ‘ultrafast’ is being defined, primarily by the marketing departments, as anything that is 100Mbps and above downstream and ‘Gigabit’ is 1000Mbps and above.

Forecasting the where and when of ultrafast and gigabit

Today the UK ranks well in European and Global terms for coverage, bandwidth, adoption and overall use. With the advent of ultrafast and gigabit supply and demand we again face a ten year cycle of planning, upgrade and investment as well as the attendant challenges.

In 2020 in terms of fixed broadband coverage that qualifies as ultrafast we expect the UK to look as follows:

The picture will be mixed however. Again we will see an urban/rural divide and this time it will be deeper as the urban areas get relatively faster earlier in the roll out cycle.

Ultrafast and gigabit are essential to the UK. The more complete the coverage with networks that fulfil the needs of the audience the more competitive country and regions will become and benefit from gross value add (GVA) in the order of hundreds of billions of pounds.

Ultrafast in the UK in 2020 – by Westminster constituency

Is ultrafast enough or should symmetric gigabit be the real objective?

Fibre to the premises, of the three flavours of ‘ultrafast’ broadband that will dominate the next decade in the UK, is the only one that can, or is projected to, be capable of symmetric bandwidths over 1Gbps.

This is significant and also serves as a divider for the market. Discussions with BT and others indicate that residential demand for more than a few hundred megabits per second down and less than one hundred up is on the horizon but not crystalised. We don’t expect large scale residential demand to start to exceed this envelope until 2019. This is well within the capability of G.fast and DOCSIS3.1.

Businesses are a different story. Recent work from Point Topic and others highlights the growing demand for and benefits of high speed symmetric broadband for businesses. While they may not want gigabits per employee more and more sites certainly demand at least an aggregate gigabit and if possible symmetric.

According to the data bandwidth is even more important that we’d previously assumed. Many models from the noughties and earlier this decade were showing return on investment of 10:1 and that’s been part of the assumption set for much of the decision making globally. The update resulting from the new input to 27/28:1 is significant. More projects in more places become far more attractive for policy makers and deployers.

In this context BTs strategy to focus FTTP on business and G.fast on residential areas makes sense.

In addition there is likely to be pent up residential (and SME/SOHO) demand driving keen adoption of FTTP overbuild of G.fast in places, either from BT or others, from 2020 on. The pace of that migration from G.fast to FTTP is one uncertainty in our model.

Timeline

London will dominate the early deployment waves.

Urban centres are likely to have a better time than in the FTTC rollout, where many areas still aren’t ‘superfast’. FTTP targeted at business customers should mean more bandwidth in business districts at least in urban areas.

The alt-nets are also making an impact. WarwickNet is specifically targeting business parks with FTTP/B while Hyperoptic, IFNL and others now pass hundreds of thousands of premises all told.

However the urban/rural divide is likely to deepen. Again we see the pattern of the ‘final third’, geographically and economically challenging, areas of the UK being left with proportionally even less bandwidth than before despite the best efforts of B4RN and Gigaclear and the like.

ISP strategies

BT plans to pass 10M premises with G.fast (ultrafast) by 2020 and 2M with FTTP and most of the country with ultrafast by 2025. Virgin media continues with Project Lighting and says it will run through to 2018 and perhaps beyond.

CityFibre is potentially the largest high speed symmetric threat to BT for second tier town gigabit infrastructure. Recently acquiring back haul giving it a presence in several towns they are currently running a growing network in York with TalkTalk and Sky looking to develop another channel to market.

Technology substitution and bandwidth

We expect the downstream bandwidth demand to evolve according to the graph below. This expectation helps us understand the pressures to upgrade from G.fast to another technology for example, particularly after 2021.

Post 2020 – consolidation, uncertainty and a divide

It is difficult to predict what will happen after 2020 with so much infrastructure and investment uncertainty. There is little motivation for commercial projects outside the 2020 footprints although the altnets will continue to patch up areas. It’s possible that Virgin Media continue to expand their reach but they run the risk of attracting Ofcom’s attention if they attain to much market power.

Premises (households + businesses) in relevant footprints

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This analysis is taken from Point Topic’s postcode level modelling and forecasting. More details and outputs available on request.

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